Less property in Auckland proves a bonus for aged care operator Arvida

Tuesday, 28 May 2019

Arvida has completed 29 apartments in the new Park Lane retirement village in Addington, Christchurch. Pictured the interior of one of the apartments.

Aged care and retirement village operator Arvida is thankful it has less property in Auckland at present than around the rest of the country.

The company reported a small rise in its profit after tax to $59.1 million for the year to March 31, 2019.

The slowing property market in Auckland and Christchurch meant slower settlements of units, the company said.

Its operating costs rose $20 million from the previous year from higher wage and insurance costs and higher residential capital gain sharing.

Bill McDonald, chief executive of Arvida, said having fewer properties in Auckland benefited the company because of Auckland's slowing property market.

* Work begins on new $130m Arvida village at Richmond West, near Nelson

Arvida has only three retirement and aged care facilities in Auckland and wants to either build new villages or to buy them in New Zealand's fastest growing region. Pictured its Aria Bay village in Browns Bay.

* Residents upset by rest home operator's plans to increase size of $35m development

* $25m housing development near retirement village in Masterton**

Of its 29 retirement and aged care villages, only three are in Auckland - in Albany, Browns Bay and Epsom. Arvida was formed from the merger of 17 retirement villages in 2014 and has purchased others since then.

Arvida is planning a $130 million retirement village at Richmond, near Nelson, which will eventually have 200 independent living units and 75 care suites.

'With 95 per cent of Arvida's 29 retirement villages located outside of Auckland, sales activity benefited,' Arvida chief executive Bill McDonald said.

McDonald said about two-thirds of Arvida's business was aged care rooms, suites and serviced apartments, occupied by retirees with more needs for services than those in independent-living units.

Cashmere residents Ross Ward and Andrea Kiddle are upset at plans by Arvida to build a third storey on a new development in front of their homes.

'This makes our cash flows generally more resilient in a slowing property market cycle as the choice becomes needs based.'

However McDonald said the company viewed Auckland as a prime market where a lot of population growth was expected and wanted to increase its weighting in that market.

There were still growth opportunities in the retirement sector, especially as most of the population lived north of Te Awamutu, he said.

Arvida had a strong year for resale of units. They rose 19 per cent to 258 in the March 2019 year while sales of 70 new units was less than last year's 79, which McDonald said was due to more than a third of the new units being completed in the last quarter of the financial year.

Arvida's strategy was to buy existing villages, but it was picky about which ones and chose those with potential for more development, as well as developing from scratch, greenfields development, McDonald said,

Its focus was more on greenfields as it increased the capacity of its development team, he said.

The company has a multi-million dollar expansion programme underway, developing existing sites with the addition of new apartments and independent living units, and is developing two large greenfields sites, one in Richmond, Nelson and the other in Keri Keri, Northland.

It will complete 170 new residential units, most of those independent living units, and some apartments, spread across seven of its villages in the year to March 31, 2020. A third of the new 170 units were already under contract.

It plans to complete more than 200 new units in the following year and to deliver 1357 new units over the next six to seven years, two thirds of which will be independent living units.

Arvida is the fifth largest aged care operator in New Zealand and has 1722 care beds, 689 serviced apartments and 1266 independent living units.

McDonald said he believed a dispute with residents of the hill suburb of Cashmere, Christchurch, over the height of its rest home, Rhodes on Cashmere, was being resolved.